Why Term Life Insurance Is the Best Coverage for Young Families

by Kevin Mercadante

Young families may be the most financially stressed group of all. Not only are there a lot of expenses in caring for a family, but there is also the need to acquire the major trappings that will be necessary to do it. This can include purchasing a house, starting a retirement plan, buying a new car or a van that can accommodate the entire family as well as purchasing specific furnishings for young children.

All of that puts tremendous financial pressure on a young family. This is why term life insurance is the best coverage for young families. The trick is to provide that coverage without further squeezing the household budget too much farther than it is already.

Life insurance at the lowest possible cost

The best deal you can get on life insurance coverage is through a term life insurance policy. Simply put, term life insurance is less expensive than any other form of coverage, particularly whole life insurance.

Insurance companies and agents will often try to sell families on whole life policies, or on other types of life insurance that also include an investment provision. This creates a convenient sounding bundle that wraps both your life insurance coverage and your investments in the same neat package.

As good as this may sound particularly to people who are not natural savers or inclined to invest money this is also a very expensive way to get necessary life insurance coverage. And with a family budget that is already stretched, this can also be the worst life insurance provision possible.

You need life insurance there's no doubt about that but you need to do it in the least expensive form possible. Term life insurance will get the job done. There are better and simpler ways to invest your money, such as putting it into no-load index funds. Generally speaking, those funds will outperform any investment that an insurance company might offer, and do so at far lower out-of-pocket costs to you.

Term enables you to buy the greatest amount of coverage

Term life insurance isn't just about saving money on premiums. The less expensive the premiums are, the more life insurance you're able to buy.

For example, if you can afford $1,000 per year for life insurance premiums, that amount may enable you to purchase a whole life policy with a 100,000 death benefit. However, that same premium may enable you to afford over $500,000 in term life insurance.

That arrangement may be absolutely necessary because you'll be

Matching limited resources with the time of greatest need in your life

As young family, your financial obligations are probably higher than they will ever be. This is not just because the cost of living is higher when you have young children (though it often is), but also because you are probably relatively young and on the lower end of the income ladder. Affordability in regard to nearly every expense category is always an issue.

But there's an even bigger reason.

Your young children are completely dependent upon you and your spouse for virtually everything. In fact a five year old child is considerably more dependent than a 14-year-old or even a college student. The reason is that they simply have more years for which you will have to provide for them before they are able to take care of themselves.

In point of fact, young families have a greater need for life insurance coverage than virtually any other type of household grouping.

For this reason, life insurance has to be structured in such a way that it not only saves you money, but also enables you to provide the greatest amount of coverage possible. The need at this point in your life is practically unlimited.

The best gift you can give your family

Like virtually every other expense that you have to pay, life insurance premiums are never something you enjoy paying. After all, not only is it an additional expense in your budget, but you're paying for a product that will have no benefit whatsoever to you during your lifetime.

However, life insurance isn't just another expense. It can be the best gift you can give your family. After all, it will likely be the primary means of your family's support in the event of your death.  It will be the gift of financial survival.

It will represent your last opportunity to provide for your family in the event of your death. That's a gift, and if you think of it that way you might even become enthusiastic about purchasing the best plan you can get. A good term life insurance policy will help you make that happen.

Why Term Life Insurance Is the Best Coverage for Young Families